Question

Sea oll fields. The company uses a job-order costing system that applies mar acturing overhead cost to jobs on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $395,600 of manufacturing overhead for an estimated allocation base of 920 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $290,000. b. Raw materials used in production (all direct materials) $275,000. c. Utility bills incurred on account, $77,000 (90% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (970 hours) Indirect labor Selling and administrative salaries $320,000 $108,000 $200,000 e. Maintenance costs incurred on account in the factory, $72,000 f. Advertising costs incurred on account, $154,000. g. Depreciation was recorded for the year. $90,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $115,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities). 1. Manufacturing overhead cost was applied to jobs, $_? . j. Cost of goods manufactured for the year, $950,000. k. Sales for the year (all on account) totaled $2,100,000. These goods cost $980,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were: Raw Materials $48,000 Work in $39,000 Process Finished Goods $78,000 Required: 1. Prepare journal entries to record the preceding transactions. 2. Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above.) 3. Prepare a schedule of cost of goods manufactured. 4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 48. Prepare a schedule of cost of goods sold. 5. Prepare an income statement for the year. Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Reg 3 Req 4A Req 4B Req 5 Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above.) Accounts Receivable Sales Beg Beg. Bal. 2,100,000% Bal. End. Bal. 2,100,000 End. Bal Raw Materials Cost of Goods Sold

Answer 1

Credit Sales Requirement (1) No Transaction General Journal 1 (a) Raw Materials Accounts Payable Debit $ 290,000 Requirement (2) Accounts Receivable Beg Bal. $ 2,100,000 Beg Bal. $ 290,000 $2,100,000 (k) 2 (b) $ 275,000 End Bal Work in process Raw Materials $2,100,000 End Bal. $2,100,000 $ 275,000 3 Manufacturing overhead Utilities Expense Accounts Payable 69,300 7,700 $ Raw Materials Beg Bal. $ 48,000 (a) $ 290,000 $275,000 (b) Cost of goods sold Beg Bal. $ (k) $980,000 $ 77,000 4 (d) $ $ 320,000 108,000 200,000 End Bal. $ 63,000 Work in process Manufacturing overhead Salaries Expense Salaries and wages payable End Bal. $980,000 $ 628,000 Manufacturing Overhead Beg Bal. 5 (e) $ 72,000 Manufacturing overhead Accounts payable Beg Bal. (b) (d) 0 Work In Process $ 39,000 $ 275,000 $950,000 6) $ 320,000 $ 417,100 $ 72,000 (d) (e) () $ 69,300 $ 417,100 ( $ 108,000 $ 72,000 $ 67,500 $ 92,000 6 () $ 154,000 Advertising Expense Accounts payable $ 154,000 $ 101,100 7 (9) Manufacturing overhead Depreciation Expense Accumulated Depreciation 67,500 22,500 8,300 $ $ 90,000 Advertising Expense Finished Goods Beg Bal. $ 78,000 6) $ 950,000 $980,000 (k) Beg Bal. 8 (h) Manufacturing overhead Rent Expense Accounts Payable $ $ $ 154,000 92,000 23,000 $ 115,000 End Bal. $ 48,000 End Bal. $154,000 9 0 $ 417,100 Utilities Expense Work in process Manufacturing overhead Accumulated Depreciation $ 90,000 (9) $ 417,100 Beg Bal Beg Bal $ 7,700 10 6) $ Finished goods Work in process 950,000 $ 950,000 End Bal. $ 90,000 End Bal. 7,700 11 (ki) Accounts Receivable Sales $ 2,100,000 Accounts Payable Salaries Expense $ 2,100,000 Beg Bal. Beg Bal. (d) $200,000 12 Cost of goods sold Finished goods $ 980,000 $ 980,000 $ 290,000 (a) $ 77,000 (c) $ 72,000 (e) $ 154,000 (0) $ 115,000 (1) End Bal. $ 200,000 Salaries and Wages Payable End Bal. $ 708,000 Beg Bal. $ 628,000 (d) Depreciation Expense $ 628,000 Beg Bal. (9) $ 22,500 Rent Expense End Bal. $ 22,500 Beg Bal. (h) $ 23,000 End Bal $ 23,000

Requirement 4(a) No 1 Credit Transaction General Journal Debit 1 Manufacturing Overhead $ 8,300 Cost of goods sold $ 8,300 Requirement (3) Froya Fabrikker A/s Schedule of cost of goods manufactured Drect materials: Raw materials inventory,Beginning $ 48,000 Add : Purchase of Raw materials $ 290,000 Materials avalable for use $ 338,000 Less : Raw materials inventory, Ending $ 63,000 Materials used in production Direct labour Manufacturing overhead applied to work in process Total manufacturing overhead Add : Work in process, Beginning $ 2,100,000 $ 971,700 $ 1,128,300 Requirement (5) Froya Fabricker A/S Income Statement For the Year Ended Sales Cost of goods sold Gross Margin Seling and administrative expense Utilities Expense $ 7,700 Advertising Expense $154,000 Salaries Expense $ 200,000 Depreciation Expense $ 22,500 Rent Expense $ 23,000 Total Seling and administrative expense $ 275,000 $ 320,000 $ 417,100 $ 1,012,100 $ 39,000 $ 1,051, 100 $ 101,100 $ 950,000 $ 407,200 Less : Work in process, Ending Cost of goods manufactured Net Income $ 721,100 Requirement 4(b) Froya Fabricker A/S Schedule of cost of goods sold Finished goods inventory,Beginning Add: Cost of goods manufactured Goods available for sale Less : Finished goods inventory, Ending Unadjusted cost of goods sold Less; Overappled overhead Adjusted Cost of goods sold $ 78,000 $ 950,000 $ 1,028,000 $ 48,000 $ 980,000 $ 8,300 $ 971,700